Generally, business maintain two different accounts for goods purchased and goods sold in the ordinary course of trade. Whenever goods are purchased for the purpose reselling them, these goods are debited to Purchases Account and when goods are sold, they are credited to sales accounts. Thereby, businesses use words sales and purchases rather than the word goods for the purpose of making double entries

December 3.

Goods Sold to Mr. A on credit worth $50,0000

December 5.

Goods Purchased on account from Mr. X and Co. for $70,000

December 7.

Received cash from Mr. A

December 12.

Paid cash to Mr. X and Co. for goods purchased on account

December 22.

Sold goods to Deadman for cash $5000

DATE

DESCRIPTION

FOLIO

DEBIT

CREDIT

Dec. 3

Debtor (Mr. A) Sales

$50,000

$50,000

Dec. 5

Purchases Creditor (Mr. X and Co.)

$70,000

$70,000

Dec. 7

Cash Debtor (Mr. A)

$50,000

$50,000

Dec. 12

Creditor (Mr. X and Co.) Cash

$70,000

$70,000

Dec. 22

Cash Sales

$5000

$5000

EXAMPLE No.3 Sales Return and Purchase Return

Sales Return or Return inward
When goods sold by the business are returned back by the customer for defects in goods or any other reason, these goods are debited to Sales Return or Return inward account

Purchase Return or Return outward
When goods purchased by the business are returned to supplier for defects in goods or any other reason , these goods are credited to Purchase Return or Return inward account